Our tips for the New Year

It’s been a positive but challenging year for buy-to-let (BTL), seeing a raft of tax changes phased in as well as the ramifications of stamp duty changes that were introduced. In a recent piece for the Financial Times (FT), Richard Waind hailed the resilient market’s adaptability to constantly changing environments.

Our tips for the New Year

Whether that be tax changes, price fluctuations or Brexit, the one constant for BTL has been successful adaption. Yields, capital gains and rental growth have all maintained throughout the year despite these variables.

Areas that have performed strongly in the past have seen mixed fortunes with the areas surrounding London and other areas in the South East falling behind. Areas in the North, namely the North West and North East are seeing huge successes as the government and other agencies attempt to redress the economic balance between South and North.

Central London and emerging areas of London are still performing strongly but certainly within the prime areas of the capital price rises have stalled as well as rents and yields. There have been some surprising results this year so far, too, with shocks appearing at the top of the charts for yields on BTL.

Here we’ll take a look at the top performers of 2017 and what may emerge in the new year of 2018.

Manchester

Manchester as a whole, and certainly around the city centre, saw a bumper year for yields and rental increases, with average rental prices over £1,000 and yields of 8.25% in some areas, such as the M6 postcode.

Acknowledging as much in a piece for The Telegraph, Zoe Dare Hall commented that a majority of new investors have been migrating from the South in search of low entry prices and high yields.

The North in general, of course, has been a spectacular performer ever since George Osborne’s Northern Powerhouse announcement back in 2014, but Manchester has long been the jewel in the crown.

With an extremely productive and lucrative 2017 can we expect the city to tail off over the coming 12 months? Not according to commentators and those experienced in Manchester BTL.

The city centre isn’t likely to become saturated any time soon, with cranes still going up in high numbers across the landscape, but we’re going to tip some of the outlying areas for big gains next year.

Stockport is currently undergoing multi-million pound regeneration work with the town’s train station undergoing huge changes, with hotels and shops being built around the area. Similarly a brand new retail and cinema complex is being built from scratch in the town centre and there are some of Manchester’s hottest restaurants gaining traction, too.

Not just there, though, areas such as Oldham and Rochdale are also undergoing large project work and the local landlords have been seeing the benefits of better transport routes and retail facilities, and we predict that the outer boroughs of Manchester will have a very strong 2018.

Sheffield

A city that has gone from strength to strength over the last ten years with the centre of the city almost unrecognisable. Sheffield has always been a popular student city but recently we’ve been seeing graduates from the two universities settling up North in record numbers.

The quality of housing and cost of living has been proving extremely attractive for many as well as a booming local economy that is offering plenty in terms of well-paid and fulfilling career prospects.

These benefits have transferred almost seamlessly into BTL performance, with yields and rental increases both growing very strongly from January towards November.

The question being, of course, whether Sheffield can carry on performing into the New Year. All the signs are there that, with increasing student numbers and a booming local job market, yes young professionals and post-grads will continue to look for quality rented accommodation in increasing numbers.

Much like Manchester city centre and its outlying areas ten years ago, Sheffield is now on a similar trajectory and there is a real buzz about the city.

Liverpool

In June, Liverpool was named the best city for buy-to-let yields by mortgage broker Private Finance, although Sheffield’s rates were highest according to Numbeo, showing 12.1% yields in the city centre.

There was a reason for that, too, with yields, demand and capital gains all growing extremely strongly. Benefitting similarly to Manchester and Sheffield from the Northern Powerhouse effect, the Merseyside city is expected to have a very impressive 2018.

Liverpool certainly feels like a place that will continue to grow from strength to strength, beginning around the time it was named Capital of Culture, back in 2008. Approaching a decade since that pivotal moment, now seems as good a time as any to invest in a city on the up.

If you would like to learn more about property investment in the North, please contact Knight Knox today to find out more!


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